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Futures and Commodity Market News |
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Sat May 17, 2008 |
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Breaking financial news 24/7 courtesy of TradingCharts.com Inc. / TFC Commodity Charts |
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Mumbai, May 11, 2008 (Asia Pulse Data Source via COMTEX) -- Imposition of Rs 8,000 export duty per tonne on basmati rice by the Indian government is likely to benefit farmers in Pakistan, a top industry official said. It is estimated that the export duty on basmati exports will transfer Rs 3,000 crore worth of Indian farm income to Pakistan farmers. "Lowering MEP does not make fiscal sense as Pakistan MEP on basmati (USD 1,300) would help them to gain the Gulf market," said Anil Mittal, Chairman and Managing Director of KRBL, which sells basmati under the `India Gate' brand. Last week, the government imposed an export duty of Rs 8,000 a tonne on basmati rice exports with a view to discourage exports. It also lowered the minimum export price (MEP) on export from USD 1,200 to USD 1,000 a tonne. In March, the government withdrew the duty entitlement passbook (DEPB) scheme benefits on basmati rice export apart from raising the MEP from USD 1,100 to USD 1,200 a tonne. The country exports over 80 per cent of the 1.6-million tonnes basmati rice that it produces. Export of the commodity stood at 1.045 million tonnes worth Rs 2,792 crore in 2006-07. In the April-November period of 2007-08, 6,48,231 tonnes of basmati rice, valued at Rs 2,028 crore, were exported. Export demand of basmati rice has already come down by 4.5 lakh MT (31 per cent) in view of various recent past policies and market changes in the last six months. Government and exporters have spent millions of dollars to build the basmati rice export market. World marketshare at the direct expense of Pakistan has been won, after numerous WTO disputes and over 400 cases fought all over the world. It is also feared that large-scale international litigation between exporters and buyers would occur as there is a fixed price-fixed quantity contract, Mittal said, adding the export duty will further bring down export demand by 20 per cent on an immediate basis. The net loss of export demand will be 38 per cent in FY 09. The loss of export demand will also apply downward pressure on farm price. On the domestic front too, the impact of export duty on basmati rice will be severe. "Nearly 8-lakh farmers are expected to be directly affected in the northern region, western UP, Punjab and Haryana due to the export duty of Rs 8,000 per metric tonne on basmati price imposed by the government," All India Rice Exporters Association's President Vijay Setia said. "This tax translates to Rs 14 per kg tax on paddy which translates to 34 per cent tax on farmers. This was the highest tax ever been imposed on agriculture commodity by the government," Setia said. It is also feared that nearly 90 lakh people will be affected who are directly or indirectly dependent on this industry. It is estimated that the loss of farm income would be to the tune of Rs 3,000 crore and loss of minimum farm price would be Rs 1,000 per quintal. The net loss of capital invested by the industry is estimated at Rs 3,000 crore. |
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